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Annual Exclusion

Individuals who have contemplated gifting money or have gifted money to other individuals have more than likely been faced with circumstances regarding the taxation of the gift. Uncertainties about what the annual exclusion amount might be or when does an individual have to file a gift tax return often lead to questions like the ones answered below.

What is annual gift tax exclusion?

The annual gift tax exclusion or exemption is one of two levels of exemptions from the gift tax. The annual gift tax exclusion allows for gifts up to an annual amount of $13,000 per recipient (2009-2012) that will not incur a tax against the money and also an IRS filing will not be required. Married couples can give up to 2 times the amount ($26,000).

A donor can give the gift to any recipients without the amount going against any other gift amount that the recipient may have receive from someone else. Gifts that may exceed the annual exclusion could still be tax-free as long as it doesn’t surpass the lifetime exclusion amount of $5,120,000 in 2012.

If someone is wants to donate $10k college expense money to college students how would the person donating deduct this as an annual exclusion?

Annual gifts cannot be deducted unless they are made as a charitable contribution. A way you would be able to deduct the amount is to donate the money to a church and then have the church pay the tuition. If a church is not an option you could reach out to other non-profit or charitable organizations.

Gifts are typically subject to a gift tax. There are certain exclusions depending on certain types of gifts. Gift that are excluded from the gift tax are gifts that that are not more than the annual exclusion for the calendar year, tuition or medical expenses if paid directly to the institution, gifts to your spouse, gifts to a political organization, and gifts to charities.

With that being said, you could pay the amount you would like to gift to these two college student directly to their college in their name. This will make it to where you would not be subject to the gift tax but you will still not be able to take a deduction on the amount. If you really must take a deduction then going through a non-profit organization would be the route you go.

If I quit claim deed a property In Virginia with an assessed value of $211,000 to a family member, will I have to pay a gift tax?

If an individual gift more than the annual exclusion amount of $13,000 to one single person in a calendar year then the donor would have to file a gift tax return. Even though the gift tax return should be filed, the donor would not have to pay gift taxes unless they have given a very large amount. The lifetime exclusion is in excess of $5,000,000. If this amount has not been reached then you would not have to pay a gift tax.

I have a condo in Orland, FL. My condo is worth about $60,000. Can I sell my condo to my child for $1.00 or transfer title to them in order for them to avoid paying a gift tax?

There is an annual gift tax exclusion that the IRS has in place of $13,000. If the gift you are giving someone is less than or equal to this amount then you will not incur a gift tax and will not be required to file a gift tax return. Gift amounts that exceed this annual exclusion could be taxed according to the gift tax amount that is around 25%.

I own both sides of a duplex in Colorado valued at $300,000. I would like to Quit Claim Deed 1/2 of the duplex to my child as a gift. Will either one of us be required to pay gift tax or inheritance tax on the property?

The IRS has in place an annual gift exclusion amount of $13,000. This means that a person can gift the amount every year without the consequences of paying a gift tax. Additionally each person has a $5,000,000 lifetime exemption amount. So an individual can give a combined amount of $5,000,000 in gifts without being subject to the gift tax. The IRS will expect a gift tax return to be filed to let them know how much of the lifetime exemption is being used.

Having correct information and understanding about annual exclusions can be helpful when dealing with questions about annual gift tax exclusion amounts. Experts can help answer questions about what annual gift exclusion is or what the lifetime gift exclusion amount may be. Get the answers fast and affordably by asking an Expert.
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